Certificates of deposit (CDs) require that money be kept in the account for a specific period of time to receive a specified return. CDs often require a larger initial investment than a savings account but yield a higher return. The longer the deposit length, the higher the interest rate will generally be because savers are keeping their money on deposit for a longer period of time. CDs are insured by the FDIC for up to $250,000, just like a passbook …
How is the interest rate on EE U.S. savings bonds determined?
Effective May 1, 2005, the interest rate on new Series EE bonds is fixed for the life of the bond. Existing Series EE bonds purchased before May 1, 2005, were not affected and continue to earn interest based on 90% of the average market yield of five-year Treasury securities.
Series EE bonds have used this variable interest rate method of crediting interest since 1982. Interest rates on previously issued U.S. savings bonds will continue to change every six months on …
What are investment assets?
Investment assets are tangible or intangible items obtained for producing additional income or held for speculation in anticipation of a future increase in value. Examples of investment assets include mutual funds, stocks, bonds, real estate, and retirement savings accounts such as 401(k)s and IRAs.
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A Comparison of Mutual Funds and Exchange Traded Funds (ETFs): Twelve Factors to Consider
Prepared by Dr. Jason L. Johnson, Associate Professor, Extension Economist, Registered Investment Advisor Texas A&M University and Texas AgriLife Extension.
Since the early 1990s, investors have had a choice between traditional mutual funds and a more recent counterpart labeled exchange traded funds (ETFs). Mutual fund assets continue to dominate the financial market with over $12.3 trillion invested. Between 2002 and the end of 2007, assets in ETFs increased almost 500% to more than $608 billion. On the surface, these two …
Saving for Children’s College Education
Yilmazer, T. (2008). Saving for children’s college education: an empirical analysis of the trade-off between the quality and quantity of children. Journal of Family and Economic Issues, 29(2), 307-324.
Brief Description: This paper examines the effect of children’s college expenses on household savings. Using the actual amount of parents’ financial support, the model estimates the expected expenditures on children’s college education and investigates the effect of expected expenditures on parents’ savings. The results show that households save in advance …
Fact Sheet Explains Options for Saving for College
The fact sheet lists information on personal investment accounts; traditional Individual Retirement Accounts; Roth IRAs; 401(K) and 403(B) retirement plans; custodial accounts, such as a Uniform Gift to Minors; Coverdell Education Savings Accounts; 529 plans; and U.S. Savings Bonds.
Released March 26, 2009
COLUMBUS, Ohio — Parents who are trying to save for their children’s education but aren’t sure where to start may find guidance in a four-page fact sheet, “College Savings Options,” from Ohio State University Extension.
The fact …
Your Time Horizon
Your Time Horizon
Time is a very important resource to investors.
Young investors with a long time horizon may choose investments that exhibit wide price swings, knowing that time is available for fluctuations to average out. Families investing for a specific mid-life goal (e.g., funding a child’s education or purchasing a home) may choose a more moderate course which has opportunity for growth, but provides more safety for the principal. Individuals nearing retirement and those with the need to depend …
Diversification
You can do several things to offset the impact of some types of risk. Diversifying your investment portfolio by selecting a variety of securities is one frequently used strategy. Done properly, diversification can reduce about 70 percent of the total risk of investing. Think about it. If you put all your money in one place, your return will depend solely on the performance of that one investment. Alternatively, if you invest in several assets, your return will depend on an …
Emergency Cash Reserve
Emergency Cash Reserve
Setting aside money to meet unexpected expenses provides a financial safety net and allows you to take advantage of financial opportunities as they arise. Most experts recommend an emergency fund equal to 3 to 6 months living expenses; however, you do not need to set aside this total amount in a low-yielding passbook, certificate of deposit, or money market account. The amount of your emergency fund depends upon your age, health, job outlook, and personal financial situation …
Investment Return
Total return is the profit (or loss) on an investment. It is a combination of current income (cash received from interest, dividends, etc.) and capital gains or losses (the change in value of the investment between the time you bought and sold it). The published rate of return for a selected investment is usually expressed as a percentage of the current price on an annual basis. However, the real rate of return is the rate of return earned after inflation, …